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ASC arrangement considered risky but OIG still rules favorably

The OIG issued a favorable advisory opinion concerning a proposed ambulatory surgical center (ASC) jointly owned by a hospital and physician. Although the OIG noted that the purported arrangement carried some risk of violation of the Anti-Kickback Statute, it concluded that it would not impose administrative sanctions unless there is intent to induce or reward referrals. The arrangement involved the development of an ASC focused on orthopedic procedures. Eighteen orthopedic surgeons would have an equal investment interest in a partnership formed for the purpose of owning the ASC. The partnership would have a 70 percent ownership interest in the ASC; the hospital would own the remaining 30 percent. Prior to receiving treatment, patients would be notified in writing regarding the physicians' interest in the ASC. The ASC also would have an exclusive contract with a hospital-owned practice for the provision of anesthesia.

The OIG found that although the arrangement does not meet all necessary requirements for safe harbor protection, there were enough safeguards in place to reduce the risk of fraud and abuse. The OIG determined that the risk of paying for referrals is mitigated because ownership is proportionate to each physician's investment and the hospital has safeguards to reduce its ability to make or influence referrals to the ASC through the physicians who are employed by or under contract with the hospital. The OIG also noted that although the medical director agreement does not meet the personal-services safe harbor due to the lack of specificity of the part-time schedule, all the services to be provided are detailed in the agreement, reasonable and necessary, and compensated by a fixed fee unrelated to the volume or value of referrals. Read the full opinion here.

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